Biden Administration Announces New Measures to Protect US Steel, Aluminum, and Shipbuilding Industries | White & Case LLP

The Biden administration has announced a package of policy measures to protect the US steel, aluminum, and shipbuilding industries from what they allege are unfair trade practices by China and calling the industries critical to economic and national security.1 The most significant new actions in the announcement are that the Office of the United States Trade Representative ("USTR") will (1) raise the current Section 301 tariffs on Chinese steel and aluminum; (2) initiate a new Section 301 investigation targeting the Chinese shipbuilding, maritime, and logistics sectors; and (3) intensify efforts to combat alleged transshipment of Chinese steel through Mexico. President Biden unveiled the actions during meetings with US labor unions in Pittsburgh, Pennsylvania on April 17, 2024.

USTR will implement President Biden's call for higher tariffs on China by tripling the current Section 301 tariffs applied to Chinese steel and aluminum products from the current average of 7.5% to an average of 22.5%. USTR is now conducting a mandatory four-year review of the Section 301 tariff action.2 The Biden administration will likely use the completion of the four-year review to implement the tariff increases. Imports of Chinese steel and aluminum are also subject to Section 232 tariffs of 25% and 10%, respectively. Combining the Section 232 tariffs with the increased Section 301 tariffs will yield average tariff rates of around 47.5% for steel products and of around 32.5% for aluminum products. Some of these products are also subject to antidumping duties ("ADD") and countervailing duties ("CVD"), which would further increase the tariff level.

The four-year review, which USTR announced in May 2022, is in its second phase and appears near completion. USTR collected public comments for phase two between November 2022 and January 2023, receiving 1,497 submissions from the public.3 Since the comment docket closed, there have been no further updates from USTR on the review, other than occasional references to how it is still ongoing. Though Section 301 requires USTR to initiate a review of Section 301 actions every four years to keep the action active, the law does not contain a comprehensive timeline for completing the reviews. In testimony before the House Ways and Means Committee on April 16, 2024, Ambassador Katherine Tai said USTR would complete the review soon in response to complaints about the slow pace, though she did not specify a timeline.4 The White House, relying on the review to implement these higher tariffs, also suggests the completion of the review is imminent.

USTR will have to determine that President Biden's requested tariff increases are consistent with the eventual outcome of the Section 301 four-year review. Upon that determination, USTR will then have final discretion on the specifics of how the increase will be implemented. President Biden's statement includes no details on the action, other than "calling for USTR to consider enhancing the effectiveness of [Section 301] tariffs on Chinese steel and aluminum products by tripling them." Despite those additional legal steps, the general nature of the outcome appears assured. More information on the tariffs for each specific steel and aluminum product subject to the Section 301 duties will become available when USTR announces the outcome of the four-year review.

As announced by President Biden, USTR has initiated a Section 301 investigation of China's acts, policies, and practices supporting its maritime, logistics, and shipbuilding sectors.5 The investigation responds to a petition filed on March 12, 2024, by a group of leading US labor unions.6 The petitioners are calling on USTR to restrict Chinese-built commercial ships by various actions, arguing that such restrictions would help the US commercial shipbuilding industry (and the steel industry that supplies it) expand production.

Now that the investigation has begun, the interagency Section 301 Committee will seek public input, hold hearings, and request consultations with the Chinese government.7 Written comments and requests to appear at the public hearing should be submitted by May 22, 2024. The hearing will occur on May 29, 2024. USTR is specifically seeking comments on: China's policies targeting the maritime, logistics, and shipbuilding sector; whether China's policies are unreasonable or discriminatory; China's efforts to dominate shipping-related activities; other Chinese policies affecting the shipping sector that USTR might want to include in the investigation; whether China's policies are burdening or restricting US commerce; the determinations required under Section 304 of the Trade Act; and any other views on the petition.

Section 301 of the Trade Act of 1974 assigns authorities to USTR for investigating foreign government practices that are "unjustifiable and burdens or restricts United States commerce" and taking appropriate action to obtain remediation of the burdensome practice. Since the creation of the World Trade Organization's ("WTO") dispute settlement system in 1995, however, USTR has typically only used Section 301 processes to develop cases for WTO dispute settlement. Unilateral Section 301 actions resumed under the Trump administration, but the Biden administration has so far refrained from initiating new unilateral actions.

Initiating the investigation does not make any commitment to the final determination or any ensuing policy actions. Section 301 investigations take up to one year to complete, meaning USTR will not reach a decision until after the November elections. A negative determination would end the matter. If USTR determines that there is a trade violation, then there is an additional process for determining the appropriate response.

If the government reaches a positive determination, deciding on policy actions would be challenging in this context. USTR has broad discretion on how it approaches Section 301 investigations and remedies. The statute generally favors a tariff in proportion to the injury as the remedy, but also allows for a broader set of import and service provision restrictions that are within the powers of the president. For international shipping, where vessels are usually based in third countries and only temporarily enter the United States to unload cargo, a tariff targeting imports of Chinese-built vessels would have little practical use.

Recognizing that limitation, the petitioners are seeking remedies beyond typical Section 301 tariffs, asking the government to impose an entry fee on Chinese-built ships unloading cargo in US ports, providing subsidies to US shipbuilders, expanding cabotage restrictions under the Jones Act, and requiring US exports to be carried on US-built ships. Some of these proposed remedies are likely beyond the president's authorities in a Section 301 investigation and would require an act of Congress. Some members of Congress have expressed support, pressuring USTR to initiate the investigation and proposing legislation similar to the remedies the petitioners are seeking. For example, a bipartisan group of Senators and Representatives re-introduced the Energizing American Shipbuilding Act in December 2023.8 The bill would require that US crude oil and natural gas exports be carried on US-built ships. The petitioners have referenced the bill favorably as a potential remedy to their concerns.

Considering the potential need for Congressional action, the Section 301 investigation may be more focused on establishing a case for action in Congress, rather than seeking direct action from the president. USTR has a history of appealing to important constituencies by initiating investigations with timelines that cross over elections. For example, the International Trade Commission ("ITC") initiated a Section 201 global safeguard investigation involving the blueberry industry, (a large agricultural industry in the swing state of Florida) shortly before the 2020 election at the request of USTR. That investigation ended the following March in a negative determination by the ITC.9 In September and October 2022 (a few months before the November 2022 mid-term elections), USTR considered a Section 301 investigation covering all seasonal and perishable agricultural products from Mexico (including blueberries) following complaints from farmers in Florida. This investigation ultimately did not proceed.

President Biden also directed USTR to "work with Mexico to jointly prevent China's and other countries' evasion of tariffs on steel and aluminum that is imported from Mexico into the United States." As the United States has raised tariffs on Chinese steel and aluminum relative to tariff levels on other countries, concerns have grown that Chinese produced products may be transshipped through countries like Mexico to avoid the tariffs. The concern has led to a long running dispute between the United States and Mexico, with USTR pressuring Mexico to adopt stronger trade controls and higher tariffs to prevent transshipment.

In recent weeks, the governments of Mexico and the United States have intensified consultations in response to concerns regarding an alleged surge of steel exports from Mexico to the United States, with US industry pressuring the Biden administration to reinstate Section 232 duties on imports from Mexico. On February 16, 2024, Ambassador Tai met with Mexican Economy Secretary Raquel Buenrostro to discuss the matter and technical-level meetings followed on February 27, 2024. Ambassador Tai urged Mexico to "take immediate and meaningful steps to address the ongoing surge of Mexican steel and aluminum exports to the United States and the lack of transparency regarding Mexico's steel and aluminum imports from third countries."10

Responding to these US concerns, Mexico's Secretariat of Economy has highlighted the importance of dialogue and cooperation between Mexico and the United States to avoid unfair practices and ensure transparency in steel trade in the North American region. In recent press releases,11 the Secretariat of Economy listed the progress made in the last year to control imports of steel and aluminum products from third countries and contain unfair trade practices, including:

The Secretariat also committed to:

On April 15, 2024, the Secretariat published the "Agreement amending the agreement by which the Ministry of Economy issues General Rules and Criteria on Foreign Trade" ("Agreement"),12 strengthening the monitoring of Automatic Import Notices for steel products, facilitating their processing for importers, and adding 72 new tariff classifications to the system's coverage. The Agreement notably establishes additional requirements for processing Automatic Import Notices for steel products, among which the following stand out: (1) information on the country the steel was melted and poured or transformed, which must match the country declared in the Mill or Quality Certificates, as applicable; and (2) a requirement to provide the name of the mill, which must be registered in the Secretariat of Economy's mill catalog.

It is unclear from President Biden's April 17 announcement if any additional actions may emerge beyond what USTR has already initiated. It is also unclear whether Mexico would take any additional actions.

Protecting the US steel and aluminum industries from what it sees as unfair foreign trade practices and subsidized excess production capacity from countries like China has long been a priority for the Biden administration. The Biden administration has used global Section 232 duties, Section 301 duties on China, and AD/CVD investigations to protect the US industry. It has also sought to negotiate tariff clubs with allied countries as a more permanent solution and is exploring options for promoting less greenhouse gas emissions-intensive production processes. The Biden administration's Infrastructure Investment and Jobs Act ("IIJA") and Inflation Reduction Act ("IRA") have also directed significant new business to the sector through domestic content preferences. As the November presidential elections approach and polling shows a close contest between President Biden and former president Donald Trump in steel producing states like Pennsylvania and Ohio, the Biden administration has become even more sensitive to the industry's concerns. The April 17 announcement shows how much President Biden wants to appeal to the sector for support.

The Biden administration has continued the Trump administration's global Section 232 tariffs on steel and aluminum, although it now applies less restrictive tariff-rate quotas to certain allied countries. USTR has also leveraged the continued threat of 232 tariffs to attempt negotiating a steel and aluminum tariff club with the European Union  the Global Arrangement on Sustainable Steel and Aluminum ("GASSA"). USTR argues that such an arrangement would allow the United States to contain the trade of below-market priced Chinese exports and promote greener steel production at the same time. However, the negotiations made little progress due to sharply diverging views between the United States and EU. In December 2023 the parties agreed to delay settlement of the matter until 2025,13 likely seeking to avoid making tough compromises shortly before both governments faced elections.

The GASSA negotiations are part of an ongoing effort by the Biden administration and US industry to build a case that the US steel industry has lower greenhouse gas emissions than industries in other countries and deserves favorable treatment in international trade.14 The ITC is conducting a study of greenhouse gas emissions at the product level for the steel and aluminum industries. USTR requested the study to help design potential future emissions-based tariffs like GASSA.15 President Biden's April 17 statement supports this position, asserting that American "green steel will fortify the infrastructure that supports our communities, form the ocean vessels that transport American goods, power the electric vehicles of our clean-energy future, and support thousands of hardworking American families." The Biden administration is exploring further green trade policy action and plans to establish a new trade and climate task force soon.

At the same time, the Biden administration appears to be backing away from some environmental commitments that were viewed as too costly or unrealistic for domestic manufacturers. On April 6, 2024, the Department of Energy announced scaled back efficiency rules for distribution transformers partly in response to concerns that the original proposal would have harmed US electrical steel producers.16 Similarly, the Environmental Protection Agency's March 20, 2024 final rule for vehicle emissions slowed the rate at which manufacturers would have to switch to making electric cars, in response to concerns from manufacturers and unions about the aggressive timeline in the original proposed rule.17

The Biden administration has continued the United States' longstanding practice of using ADD and CVD investigations to protect the US steel and aluminum industries from unfairly priced and subsidized imports. President Biden's April 17 statement noted that the Department of Commerce ("DOC") has imposed duties in 30 new ADD and CVD investigations of steel-related products since he took office. The steel industry is the most common sector of activity for investigations. The Biden administration has also sought to expand and strengthen ADD and CVD authorities. On March 25, 2024, DOC unveiled a new regulation that could enable DOC to find dumping and subsidization in more investigations and set higher duty rates.18

1 "Fact Sheet: Biden-⁠Harris Administration Announces New Actions to Protect US Steel and Shipbuilding Industry from China's Unfair Practices," White House, April 17, 2024.2 For more information, see White & Case's latest commentary on the Section 301 review at, "USTR Extends China Section 301 Tariff Exclusions While the Four-Year Review Continues into 2024."3 "Request for Comments in Four-Year Review of Actions Taken in the Section 301 Investigation: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation," 87 FR 62914 (October 17, 2022).4 "Hearing on the Biden Administration's 2024 Trade Policy Agenda with United States Trade Representative Katherine Tai," House Committee on Ways and Means, April 16, 2024.5 "Initiation of Section 301 Investigation: China's Acts, Policies, and Practices Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance," USTR.6 Section 301 Petition: China – Maritime, Logistics, and Shipbuilding Sector.7 Interested parties may submit their comments and requests to appear on USTR's Comments Portal and instructions for submitting comments are include in the Federal Register Notice.8 S.3467 - Energizing American Shipbuilding Act of 2023, 118th Congress (2023-2024),; and H.R.6724 - Energizing American Shipbuilding Act of 2023, 118th Congress (2023-2024).9 Fresh, Chilled, or Frozen Blueberries, Investigation No. TA-201-77; also see commentary from White & Case on the initiation at, "US International Trade Commission Institutes Global Safeguard Investigation Concerning Fresh, Chilled and Frozen Blueberries."10 "Readout of Ambassador Katherine Tai's Meeting with Mexico's Secretary of Economy Raquel Buenrostro," USTR, February 16, 2024.11 See the Mexican Secretariat of Economy's press releases dated February 16 and February 27, 2024 (in Spanish).12 "Agreement amending the agreement by which the Ministry of Economy issues General Rules and Criteria on Foreign Trade," April 15, 2024 (in Spanish).13 "Statement from Ambassador Katherine Tai on Steel and Aluminum Tariff Rate Quota Extension," USTR, December 28, 2023.14 The majority of US steel production comes from recycling scrap steel in electric arc furnaces, which emits significantly less greenhouse gas emissions than the more common blast furnace approach.15 Steel And Aluminum Emissions: Investigation No. 332-598, ITC.16 "DOE Finalizes Energy Efficiency Standards for Distribution Transformers That Protect Domestic Supply Chains and Jobs, Strengthen Grid Reliability, and Deliver Billions in Energy Savings," Department of Energy, April 4, 2024.17 "Biden-Harris Administration finalizes strongest-ever pollution standards for cars that position US companies and workers to lead the clean vehicle future, protect public health, address the climate crisis, save drivers money," Environmental Protection Agency, March 20, 2024.18 For more information, see White & Case's latest commentary on the DOC regulations at, "United States Expands and Strengthens Enforcement of Antidumping and Countervailing Duty Laws."

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